(May 28, 2021) The delay to Oct. 1, 2022 of the mandatory compliance date of the general qualified mortgage (QM) final rule is the subject of a regulatory alert issued by NCUA this week and sent to all federally insured credit unions.
The letter details action taken by CFPB in late April, which moved compliance with the QM rule to Oct. 1 of next year from July 1 of this year. The bureau said in April that the delay was made to “help ensure access to responsible, affordable mortgage credit, and preserve flexibility for consumers affected by the COVID-19 pandemic and its economic effects.”
The final rule making the change was titled “April 2021 Amendments to the ATR/QM Rule” (ATR stands for “ability to repay”).
In its alert, NCUA notes the two categories that the compliance date delay affects: General QMs and temporary GSE QMs (referring to QMs issued by government-sponsored enterprises Fannie Mae and Freddie Mac).
The alert notes that, under the general GM category, a lender can use either the original underwriting process (with the 43 percent DTI limit) or the new underwriting process (with price-based thresholds) for applications received from March 1, 2021, to Sept. 30, 2022. Lenders must use the revised General QM loan definition for applications received on or after Oct. 1, 2022.
Under the GSE category, the Alert states, the temporary GSE QM loan definition expires upon the earlier of Oct. 1, 2022, or the date the applicable GSE exits federal conservatorship (rather than on the original mandatory compliance date of July 1, 2021, or the date the applicable GSE exits federal conservatorship).
(April 30, 2021) Compliance with a final rule on “qualified mortgages” (QM) is delayed to Oct. 1, 2022, the CFPB said this week, asserting that the pause would allow lenders more time to offer the loans based on homeowners’ debt-to-income (DTI) ratios, and not only on certain pricing thresholds.
The delay, which changes the mandatory compliance date from July 1 of this year to the Oct. 1 date of next year, is part of a final rule the CFPB is calling the “April 2021 Amendments to the ATR/QM Rule.” ATR stands for “ability to repay.”
In a release, the bureau said the action was taken to “help ensure access to responsible, affordable mortgage credit, and preserve flexibility for consumers affected by the COVID-19 pandemic and its economic effects.”
“As the mortgage market navigates an uncertain and challenging time, extending the date by which lenders must comply with the CFPB’s new General QM definition will help provide options and flexibility for both lenders and borrowers,” CFPB Acting Director Dave Uejio said in a statement.
The bureau also asserted that delaying the QM compliance date by more than a year would give lenders more time to use the Government-Sponsored Enterprise (GSE) Patch, which has also been extended to Oct. 1 of next year – or until the date that the applicable GSE exits conservatorship, whichever comes first. The agency said the GSE patch provides QM status to loans that are eligible for sale to GSE mortgage companies Fannie Mae or Freddie Mac. “The availability of the GSE Patch after July 1, 2021 may be limited by recent revisions to the Preferred Stock Purchase Agreements entered into by the Department of the Treasury and the Federal Housing Finance Agency,” the bureau noted.
According to an executive summary of its final rule issued Tuesday, the CFPB said that while the April 2021 final rule extends the general QM final rule’s mandatory compliance date, the effective date of the QM rule remains March 1, 2021.
The summary notes that for mortgage applications on the effective date (or after) – but before the new mandatory compliance date of Oct. 1, 2022 – lenders have the option of complying with either the revised, price-based general QM loan definition or the original, total monthly DTI-based general QM loan definition.
Only the revised, price-based general QM loan definition is available for applications received on or after the Oct. 1, 2022 mandatory compliance date, the summary states.
(Feb. 26, 2021) Updates to the small-entity compliance guide on the ability-to-repay/qualified mortgage (QM) rule were also issued this week by the bureau, reflecting amendments to last year’s final rules to extend the government-sponsored enterprise (GSE) patch, or what the bureau now calls the “temporary GSE QM rule.”
The rule is used for loans that are eligible for purchase or guaranteed by Fannie Mae or Freddie Mac, creating a seasoned QM definition, and revising what is now called the general QM definition.
The bureau announced its compliance guide updates in an email that also included the statement regarding potential future action on the seasoned QM rule and revised general QM rule.
LINK:
Ability-to-Repay and Qualified Mortgage Rule Small-Entity Compliance Guide, February 2021
(Jan. 29, 2021) NASCUS summaries of recent NCUA letters to credit unions – and a summary of a regulatory alert issued by the agency – are among the latest to be published by NASCUS. All three are available to members only.
The two letters summarized are on the agency’s outline of the issues affecting credit unions contained in the Consolidated Appropriations Act, 2021 adopted by Congress Dec. 27 (letter 21-CU-01, issued by the agency the week of Jan. 4), and about NCUA’s Supervisory priorities for 2021 (letter 21-CU-02, issued by the agency last week).
The first letter notes that that most of the provisions of the consolidated appropriations bill extend portions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law last March as the impact of the coronavirus crisis became apparent. Those provisions are extended to Dec. 31, 2021, the letter notes. It also touches on provisions affecting the agency’s Central Liquidity Facility (CLF), troubled debt restructurings (TDRs), compliance with the Current Expected Credit Loss (CECL) accounting standard and more.
The second letter outlines the broad scope of the agency’s regulatory priorities for 2021, primarily focusing on challenges to credit unions posed by the ongoing coronavirus pandemic and steps to enhance the agency’s offsite monitoring of credit unions’ conditions. Additionally, the letter states that examiners will not be assessing credit unions’ efforts to transition to the CECL standard “until further notice.”
The summary of the regulatory alert (21-RA-01), released by NCUA earlier this month, outlines the agency’s view of CFPB’s action late last year to issue two final rules amending the Ability-to-Repay/Qualified Mortgage Rule (ATR/QM Rule) in Regulation Z. The final rules would replace the 43% debt-to-income (DTI) ratio limit with price-based thresholds (under the bureau’s general QM final rule), and create a new category of qualified mortgage (known as the seasoned QM final rule).
LINKS:
NASCUS Summary: LTCU 21-CU-01, Summary of the Consolidated Appropriations Act 2021 (members only)
NASCUS Summary: LTCU 21-CU-02, NCUA’s Supervisory Priorities (members only)
NASCUS Summary: Regulatory Alert 21-RA-01: CFPB Amends Ability-to-Repay/QM Rule under TILA (members only)